South Korea’s factory activity saw its steepest decline in 15 months in September due to a drop in overseas demand, marking a slow path to economic recovery. The purchasing managers index (PMI) for manufacturers in Asia’s fourth-largest economy, compiled by S&P Global, dipped to 48.3 in September from 51.9 in August. This index, which distinguishes between expansion and contraction, fell below the 50-mark for the first time in five months, hitting its lowest since June 2023.
Output and new orders both decreased in September, ending five months of gains. Output recorded its steepest decline in 11 months, while new orders saw their sharpest drop in 15 months. The survey highlighted sluggish domestic demand as a key factor behind the fall in orders, and new export business declined for the first time this year. Exports to China, Japan, India, and the United States all weakened.
Usamah Bhatti, an economist at S&P Global Market Intelligence, noted that South Korea’s manufacturing sector faced significant challenges in September, with future prospects also clouded by uncertainty. The country’s economy saw an unexpected contraction in the second quarter, the sharpest since the fourth quarter of 2022, with officials hoping exports would help boost growth.
Is the chip rally coming to an end? Latest export numbers from South Korea show it’s softening for sure. https://t.co/QQvFTm3Iz6 pic.twitter.com/7ouAMkiuGH
— Sam Kim (@samkimreports) October 1, 2024
The survey also indicated that backlogs of work, a near-term activity indicator, fell the most in five months. Optimism for the year ahead dropped sharply to its lowest level since December 2022. Employment experienced its most significant decline in 1.5 years. In September, Samsung Electronics announced it would cut its overseas workforce by up to 30%, and battery firm SK On revealed plans for voluntary redundancy programmes.
On a more positive note, inflation in input prices eased to its lowest since August 2023, and output prices fell for the first time in 13 months.
What Other Media Are Saying
- Hindustan Times reports Taiwan shuts down ahead of Typhoon Krathon, with torrential rain forecast, emphasizing the government’s caution and preparations following past typhoons.(read more)
- Reuters reports that South Korea’s factory activity has sharply declined due to weakened overseas demand, particularly in China, Japan, India, and the United States.(read more)
- Money US News: South Korea’s manufacturing sector contracted sharply in September due to weakened overseas demand, with export sales declining to major markets like China, Japan, and the US.(read more)
Frequently Asked Questions
Here are some common questions asked about this news
Why did South Korea’s factory activity contract in September?
Overseas demand slowed and domestic demand was sluggish.
What was the purchasing managers index for South Korea in September?
The index was 48.3 in September.
Which countries showed weakened export sales to South Korea?
Export sales weakened to China, Japan, India, and the United States.
How did employment in South Korea’s manufacturing sector change in September?
Employment declined by the most in 1-1/2 years.
Did inflation in input prices change in South Korea in September?
Yes, inflation in input prices eased to the softest since August 2023.
